[opendtv] News: Will local stations pull plug on cable?

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  • Date: Wed, 14 Dec 2005 08:22:36 -0500

Will local stations pull plug on cable?

December 14, 2005 12:00am
Source: Erie Times-News (PA) (KRT)

  Dec. 13--The days of getting free television feeds on cable from 
broadcast networks such as ABC and CBS could soon be a thing of the 

  Officials from Nexstar Broadcasting Group Inc. and Lilly 
Broadcasting -- the corporate owners of Erie's commercial network 
affiliates -- said Monday they each are negotiating contracts with 
the region's cable carriers that, for the first time, could net them 
a per-subscriber payment from the cable companies.

  Nexstar, which owns Erie's ABC affiliate, WJET-TV, and Fox's 
affiliate, WFXP-TV, is looking to receive about 30 cents per 
subscriber in its agreements, a company official said Monday.

  Lilly Broadcasting, which owns Erie's NBC, CBS, UPN and WB 
affiliates, also is discussing retransmission agreements with cable 
companies that could include a fee per subscriber, though it would 
not specify the size of that fee.

  The demands come at a time when local broadcasters are investing 
millions in federally mandated high-definition broadcasting equipment 
and are receiving fees from satellite providers for their signals.

  "In the past, there wasn't a whole lot of leverage," said Duane 
Lammers, chief operating officer for Nexstar. "With satellite now 
paying us, that's the goal with cable companies as well. We're 
certainly negotiating more favorable terms than we have ever before."

  But those terms have not come without a cost in some markets, as 
some cable companies, including Erie's Time Warner Cable, contend 
they should not be paying local broadcasters for signals that can be 
received for free over an antenna.

  "We have held for some time that we wouldn't pay cash payments to 
carry a broadcast signal that is available to anyone with rabbit 
ears," said Mark Harrad, a Time Warner spokesman.

  That stance, which is shared by some cable carriers nationally, has 
prompted Nexstar, which operates 46 stations in 27 markets, to pull 
its stations from cable systems in some parts of the country that 
have been unwilling to pay for its programming.

  Lammers said Nexstar's stations are off the air for customers of 
Cable One -- a cable carrier in Missouri and Texas.

  Nexstar stations also went black in the Cox Cablevision system for 
10 months earlier this year after it was unable to strike a deal with 
the cable carrier. The standoff affected Cox customers in San Angelo, 
Abilene, Sweetwater, Snyder and Mount Pleasant in Texas; Magnolia, 
Ark.; and Bossier City and Minden, La.

  A similar scenario could play out in some parts of northwestern 
Pennsylvania if Nexstar is unable to reach deals with local cable 
carriers by the time the current contract expires Dec. 31.

  Lammers, however, said he is hopeful his company will be able to 
settle all of its contracts by that date.

  Brian Lilly, general manager for Lilly Broadcasting, said his 
company already has deals with about 40 percent of the region's cable 
carriers and is optimistic that it can reach agreements with the 
remaining carriers by Dec. 31.

  But if those discussions turn sour, Lilly said the company would be 
willing to pull its stations from local cable carriers in some parts 
of the region.

  "That's a possibility," he said. "If that is a possibility, we will 
make sure we run crawls and alert viewers in those areas."

  Neither Lilly nor Lammers would specify which of the region's 10 
cable carriers already have signed deals.

  One of those carriers, Coaxial Cable Television of Edinboro, is 
owned by the Times Publishing Company, which publishes the Erie 

  Katy Bachman, senior editor of Mediaweek magazine, said the push by 
local broadcasters to command fees from cable companies carries some 
risk for the broadcasters, who lose cable subscribers as potential 

  That risk is considerable, since 60 percent of U.S. households 
subscribe to cable, according to an August survey by J.D. Power and 

  But, with alternatives growing for viewers, those risks are not as 
great as they have been in the past.

  The J.D. Power survey found 27 percent of households subscribe to 
satellite service -- up from just 19 percent in 2004.

  With that increased leverage, local broadcasters are now looking for 
a slice of the cable television pie.

  "(Broadcasters) let this giant monolith called cable build up and up 
and charge enormous rates and they're not seeing a cent of it and 
they're tired of it,"Bachman said. "It's very brave of Nexstar -- 
being a smaller broadcaster in smaller markets -- to stand up to 
these large cable systems."

  The battle, however, hurts consumers, either through higher cable 
rates or through fewer choices on cable.

  "What's happening is the consumer loses in these fights," she said. 
"But the broadcasters feel like they have no other choice."

  Staff writer Dave Richards contributed to this report.

<<Erie Times-News (PA) (KRT) -- 12/14/05>>

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